DraftKings Inc at MoffettNathanson Technology, Media, and Telecom Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : Let's kick off actually going back to the fourth quarter, if you want to relive those days.

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : So in your letter to shareholders there, I actually thought you laid out a really interesting...

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : Okay, good. So you laid out your vision of 3 types of growth companies that we're going to see now that the days of free money are essentially behind us. First was the companies that are undercapitalized with need to take drastic actions to survive. Second, companies well capitalized but have difficulty pulling back on spending without hurting their ability to compete, and we're seeing that play out in the media world today. And then third, companies that need to accelerate their path to profitability by strategically cutting back on expenses while still investing behind the long-term competitive advantages. So all that being said, can you just walk us through why you believe DraftKings is that third -- in the third bucket and position to thrive? And really what has changed running this company in this higher rate world that we're all living in today? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 16, 2023 / 6:00PM, DKNG.OQ - DraftKings Inc at MoffettNathanson Technology, Media, and Telecom Conference

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : That's great. So maybe just following up, as the market has shifted away from purely growth in TAM story, to focusing on that long term or the even shorter-term path to profitability, I'm wondering how do you balance that, right, in terms of focusing on that long-term growth and given all the upside of what's to come with this specific market and then pulling back to reach profitability faster?

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : Okay. Great. So we've talked a little bit on the cost side already. But maybe just kind of zooming out, you've been very forthcoming in terms of where you see the TAM going, right, in terms of the top line and the upside opportunities and how quickly this market is growing. I'm curious, as you sit here today, I know you haven't officially updated any longer-term targets. But where do you see upside opportunities on this long-term TAM story?

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : Okay, cool. So you've also provided long-term guidance on the adjusted EBITDA margin side of over 30%. So as we think about where expenses are today and how you get there, maybe you just want to expand upon what are the biggest opportunities to pulling or normalizing on the expense side or getting the operating leverage there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 16, 2023 / 6:00PM, DKNG.OQ - DraftKings Inc at MoffettNathanson Technology, Media, and Telecom Conference

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : Okay. Great. So talking a little bit more about the top line growth story. We have seen a rapid legalization on the online sports betting, as you've mentioned over the past couple of years. Can you help us think about as that normalizes and obviously, dependence on some big states that's still to come, but how should we think about organic revenue growth over the next couple of years without any change of legalization trends?

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : I want to follow up on the parlay. So can you talk about how DraftKings is using parlays to increase that user engagement? And how is it driving the higher handle and hold? And then maybe if you want to throw out, how much share of your total handle is coming from parlays or where you see that going?

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : How much, just a quick follow-up, the social media play into that? Like is that something an opportunity for you guys to lean even more heavily into?

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : So another product that is clearly of interest to you and the broader betting space is the opportunity for live in-game betting in the U.S. specifically. So just curious, how is DraftKings positioned today? And how are you going to essentially be leading the charge on this? From what we've seen around the world, it's a big opportunity here.

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : Great. You touched on iGaming legalization earlier in terms of potential upside or maybe that it's even gone a little bit slower. I'm curious if you can share a little bit more about the economics where you are live in iGaming and OSB. How different of a economic profile are those states versus the others?

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : So maybe if you want to just expand upon that in terms of the new state launches just launched in your hometown and Ohio, my hometown. So I'm just wondering if you compare those new launches towards how those compare versus some of the launches over the past couple of years? And how quickly things are changing on that front?

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : Awesome. Maybe if we can talk about the tech [side], right? I mean, something that you've talked a lot about over the years. What areas on your platform do you think has the most room to still improve? You've clearly spent a lot of time focusing on this and getting it to the place where it is today. Where do we go from here?

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : On the behind the scenes side.

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : Awesome. Maybe the follow-up would be the Golden Nugget integration. And maybe if you just want to talk about what improvements you expect to happen once that kind of comes all together.

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : Awesome. You alluded to this in some of your opening comments, but I'm wondering how would you characterize the changes we've seen in competitive pressures today? Clearly, a lot has happened over the past year? And then maybe how much time do you actually spend focusing on what your competitors are even doing?

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : So maybe the natural follow-up to that is the recent news with Fanatics and PointsBet. I don't know if you want to make any comment specifically about that. But just even to broaden it out, like how do you view M&A given some of the competitive dynamics that are going on in the marketplace now?

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : That's great. So I guess following up on that, it seems clear, as you just mentioned, DraftKings has cemented itself as that top #2 player in terms of market share on the OSB side and clearly, success on the iGaming side. How do you view expanding that gap, right? And just kind of further cementing that and leaning in and even closing the gap potentially with FanDuel?

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : Maybe one piece of that is the marketing spend, and you touched on that a little bit earlier, but maybe just to expand. As you think about that national versus local mix and now that you've reached the size and scale of where you are today, how do we think about that local component going forward? Is it essentially going to all but go away in new -- except for new state launches? Or is there still a reason to be spending on the local side? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 16, 2023 / 6:00PM, DKNG.OQ - DraftKings Inc at MoffettNathanson Technology, Media, and Telecom Conference

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : Awesome. All right. Shifting gears a little bit. If we talk about your media strategy and DraftKings launched its own streaming app and has...

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : Fast channels.

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : Thank you.

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : We are well aware of the difference on the media side. So if you can just maybe expand upon that and talk about the strategy behind that. And how is that going to drive incremental growth for the company? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 16, 2023 / 6:00PM, DKNG.OQ - DraftKings Inc at MoffettNathanson Technology, Media, and Telecom Conference

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : Right. Maybe if you can expand a little bit about those traditional media partnerships that you just touched on. Is that something that you can see to help DraftKings even expand their base beyond where you're currently at? And how strategic of a partnership are you looking for there?

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : Yes.

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : So maybe if we can fast forward and after you've reached all of your goals and the long-term success as you've laid out, I'm just curious, your thought process on how to evaluate exclusive rights deals for DraftKings. Do you ever see DraftKings or even some of your peers holding some of these more exclusive?

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : Yes, exactly. And on the Major League side and then clearly, it goes down in terms of tertiary type rights?

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : Okay. Great. We have 1 or 2 quick questions from the audience to squeeze in, if that's okay. So question here and the changing sports media ecosystem, that there's a lot of changes going on, on the media side. Diamond sports bankruptcy, clearly front and center there. Does that change your view in terms of where this is all going and how the worlds are converging quickly here?

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : Another fun topic from the audience here. How do you see the NFT market playing out? You have discussed that in the past, is that something an area of opportunity that you're less focused on today? Or is that still a longer-term opportunity that is DraftKings' focus?

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : So I think we're out of time, but I will throw one last one in. Just as we think about -- clearly, there's been a re-rating in your stock to date. I'm curious what you think investors are still missing as part of the story?

Question: Robert S. Fishman - MoffettNathanson LLC - Analyst : Awesome. Well, Jason, thank you so much for being here.